Asia: Fresh concerns over China drag stocks lower across the region

Most Asian markets declined on Tuesday, as worries over a slowdown in China intensified after another poor set of economic data.

After posting their highest close since 20 August on Monday, the Shanghai Composite Index declined 0.18%, while Hong Kong’s Hang Seng fell 1.43% after figures released during the session showed Chinese consumer inflation slowed down more than expected last month.

According to the National Bureau of Statistics, the consumer price index rose 1.3% year-on-year in October compared with a 1.6% gain in the previous month and with analysts’ expectations for a 1.5% increase.

Producer prices declined 5.9% year-on-year last month, marking the 44th consecutive decline, compared with a 5.9% drop in September and with analysts’ expectations for a 5.8% fall.

Both sets of figures coupled with Monday’s sluggish readings on imports and exports seem to suggest that fresh stimulus measures could be inevitable, as worries over a slowdown in the world’s second largest economy have intensified.

“If Wednesday’s October industrial production and retail sales numbers are similarly weak, then it wouldn’t be too much of a surprise to see further easing measures between now and the end of the year,” said Michael Hewson, chief market analyst at CMC Markets.

Elsewhere, Australia’s S&P/ASX 200 and South Korea’s Kospi declined 0.40% and 1.44% respectively, as concerns over China’s slowing economic momentum continued to weigh on other markets in the region.

“While many headlines are focusing on the China economy slowing down, what is important to understand is that reduced growth in China is no problem for the economy itself but for those economies that are reliant on export demand to China,” said FXTM chief market analyst Jameel Ahmad.

However, there was better news in Japan, where, buoyed by a weakening yen, the Nikkei Stock Average rose 0.15%, marking its fifth consecutive day of gains to reach its highest level in two and a half months.

On the currencies front, the yen gained 0.03% against the dollar but remained close to its lowest level against the greenback since late August, as the US currency continues to gain strength ahead of a likely hike in interest rates next month.

Elsewhere, the Australian dollar gained 0.09% against its US counterpart.